If a project has a zero NPV when the expected cash flows are discounted at the weighted-average cost of capital,then the project's cash flows are just sufficient to give debtholders and shareholders the return they require.

Question

Quizplus · Accepted Answer

A zero NPV indicates that the expected cash flows are just enough to cover the required return of both debt and equity holders, which is equal to the weighted-average cost of capital. Therefore, the statement is true.

If a Project Has a Zero NPV When the Expected